New York (September 15) - One of the more troubling admissions of Federal Reserve Chair Powell at his speech last month was his acknowledgement that "r-star" (r*), or the "natural" rate of interest, had fallen by some 50% since 2012. As Chair Powell described it:
This rate (the r*rate) is not affected by monetary policy but instead is driven by fundamental factors in the economy, including demographics and productivity growth-the same factors that drive potential economic growth. The median estimate from FOMC participants of the neutral federal funds rate has fallen by nearly half since